Correlation Between FAST RETAIL and Live Nation

Can any of the company-specific risk be diversified away by investing in both FAST RETAIL and Live Nation at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining FAST RETAIL and Live Nation into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between FAST RETAIL ADR and Live Nation Entertainment, you can compare the effects of market volatilities on FAST RETAIL and Live Nation and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in FAST RETAIL with a short position of Live Nation. Check out your portfolio center. Please also check ongoing floating volatility patterns of FAST RETAIL and Live Nation.

Diversification Opportunities for FAST RETAIL and Live Nation

0.35

Correlation Coefficient

FAST RETAIL  Live Nation

Weak diversification

The 3 months correlation between FAST and Live is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding FAST RETAIL ADR and Live Nation Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Live Nation Entertainment and FAST RETAIL is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on FAST RETAIL ADR are associated (or correlated) with Live Nation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Live Nation Entertainment has no effect on the direction of FAST RETAIL i.e., FAST RETAIL and Live Nation go up and down completely randomly.

Pair Corralation between FAST RETAIL and Live Nation

Assuming the 90 days trading horizon FAST RETAIL is expected to generate 1.28 times less return on investment than Live Nation. But when comparing it to its historical volatility, FAST RETAIL ADR is 1.19 times less risky than Live Nation. It trades about 0.1 of its potential returns per unit of risk. Live Nation Entertainment is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  11,450  in Live Nation Entertainment on October 11, 2024 and sell it today you would earn a total of  920.00  from holding Live Nation Entertainment or generate 8.03% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	97.44%
Values	Daily Returns

FAST RETAIL ADR  vs.  Live Nation Entertainment

FAST RETAIL ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FAST RETAIL ADR has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, FAST RETAIL is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Live Nation Entertainment

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Live Nation Entertainment are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Live Nation reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with FAST RETAIL and Live Nation

The main advantage of trading using opposite FAST RETAIL and Live Nation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FAST RETAIL position performs unexpectedly, Live Nation can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Live Nation will offset losses from the drop in Live Nation's long position.

The idea behind FAST RETAIL ADR and Live Nation Entertainment pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Technical Analysis module to check basic technical indicators and analysis based on most latest market data.